Answer to Question #299307 in Civil and Environmental Engineering for Glady_7

Question

If you deposit $6500 into an account paying 8% annual interest compounded monthly, how much money will be in account after 7 years?

Answer 1

Given:-

Principal (p):-$6500

Rate(R):-8/100

n:-12( compounded monthly and there are 12 months in year)

Time(T):-7 years

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Need to Find:-

⚫How much money will be in the Account after 7 years?

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Solution

Amount=> P (1 + r/n)^(nt)

=>6500(1+0.08/12)^(12×7)

=>6500(1+0.08/12)^(84)

=>6500(1+0.08/12)^(84)

=>6500×(12.08/12)^84

=>6500×1.75

=>$11,375

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Answer:-$11,375

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Formula used:-P (1 + r/n)^(nt)

where,

A = the future value of the investment/loan, including interest

P = the principal investment amount.

r = the annual interest rate (decimal)

(decimal)

n = the number of times that interest is compounded per unit t

t = the time the money is invested

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Remember:-

Before putting the value of rate always divide the number by 100 because rate is always in %which means value per 100.